Edinburgh Interactive Festival: Ed Williams Interview

Feature by Paul Butterfield, published on Friday 14th August 2009

With the Edinburgh Interactive Festival attempting to carve out a niche in the bloated circuit of videogame conferences as a cultural celebration of our industry, one less focused on selling products to investors and more on keeping a finger on the pulse of development trends and potential new technology, Ed Williams may seem like a poor fit. By definition the market analyst’s occupation requires him to keep a close eye on the business side of gaming, where multi-million pound investments are not likely to be thrown around carelessly - particularly in the bleak financial climate of 2009. Sitting down to speak with him in the halls of the Festival, however, we found a man who was enthusiastic and optimistic about the future of videogames and the new technologies that may include, just as much as he was knowledgeable about the current factors affecting everybody involved in games. It soon became clear just how appropriate a choice he was to speak in Edinburgh.

Thunderbolt: For our readers, what are you at the Edinburgh Interactive Festival to talk about today?

EW: I do equity research, so I’m analysing publicly traded companies; today I’m here to talk about the search for profitability, and the challenges publishers have had in expanding their business in the course of the last few years. Mainly it’s about looking at how development costs have risen, and how the more modest rises in gross profit have failed to compensate for this. I’m interested in what will happen in the future to these operations, and I think the key message is: there is going to be disruption to the business model of the industry. Currently the industry is based primarily on packaged goods sales, and in the future this isn’t going to be the case - sales and profits will be based more on how much a game is played, and how long it is played.

Thunderbolt: Do you think there’s much of an incentive left in the industry to create entirely new, innovative IPs at the expense of block buster sequels which are guaranteed to bring in money?

EW: I think that you have to bring in new IPs. I think if publishers were only interested in doing extensions of their existing brands, you’d end up with a stale workplace. So looking at it from a financial standpoint, what has to happen is investment in new genres, new IPs and new categories of games. You have to do this somewhat carefully, but I think you have to do it nonetheless - otherwise you’re able to milk your business for a couple of years, or whatever the time period might be, but then there’s nothing left.

Thunderbolt: Is the growth of the internet and micro-transactions key to avoiding the kind of situation you just described?

EW: It’s key to creating new business models, with more people likely to play games online, but generally the problem with the internet is that there’s so many web-based entertainment choices now that videogames are now having to compete with the likes of applications on an iPhone or games found on Facebook.

Thunderbolt: So in general, are these advances in technology likely to fuel growth in the performance of the videogame industry or bring about its demise?

EW: In my mind the definition of “videogames” tends to be limited to packaged goods transactions, and in that sense the industry is likely to be under added pressure. However, if you look past that and into the wider sense of the term, incorporating web-based distribution, and micro-transactions, I think you’ll still see the industry growing.

Thunderbolt: Would you say these new forms of distribution are set to further empower large franchises and valuable licenses, or detract from their influence?

EW: I think it does [empower franchises]. Looking at the situation as it has gone on so far, the only properties which have managed to sustain quality, and by extension price for long periods of time due to frequent downloads or updates have been the big franchises; that’s mainly where you’ll find examples so far of companies being able to release new content frequently enough to keep interest for a game released in November consistently high until the following April or May.

Thunderbolt:What about user-created content? Is it likely that gamers becoming interested in creating their own personalised teams on a sports game will remove the need for official licenses of genuine professional teams?

EW: I don’t think it detracts from the value of the franchise, as you’ll largely still be attracted to the game based on the license that it has. People may want to put their own team into FIFA, but they’ll still be doing so based on the attraction of competing with the licensed teams.